By Gokhan Kurtaran
ANKARA
Political uncertainty currently weighs on the Turkish economy, but a new government could resolve policy issues and take the country forward, World Bank Chief Economist Franziska Ohnsorge told Anadolu Agency on Thursday.
The bank has forecast three percent growth for Turkey in 2015. But uncertainties after the elections could hurt growth if there is a prolonged period of political instability, Ohnsorge said.
"We have to see what the future actually brings,” she warned.
Our growth forecast is based on a number of potentially improving factors, Ohnsorge explained. .
"We expect a much more benign external environment as the euro area is clearly picking up. Financing costs [for external debt] are still low. There are potential downside risks [a possible rate hike by the Federal Reserve or rising capital outflow from emerging markets], but they may not materialize next year. On top of that, uncertainty ahead of elections has now been relieved, so confidence will pick up strongly in the rest of this year and next year.” she said.
“In run up to the elections we have seen already that these political uncertainties weighed on investment. Going forward we hope that election will resolve some of uncertainties and that strong policies will support improvement in growth to 3 percent this year and 3.9 percent in 2016,” she said.
Ohnsorge evoked the danger of an incease in interest rates in the U.S. She pointed out that her institution also asked the Federal Reserve to postpone an interest rate hike, as the Managing Director of the International Monetary Fund Christine Lagarde also did recently, She warned that a rate may adversely affect the US economy and also it would be especially negative for emerging economies.
